CEDAR PROVIDENT FUND2017 ANNUAL REPORT

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ContentsFUND INFORMATION 3

CHAIRMAN’S REMARKS 4

FUND ADMINISTRATION REPORT

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INVESTMENT REPORT 9

TRUSTEE’S REPORT 15

AUDITOR’S REPORT 16

STATEMENTS OF ACCOUNTS 19

GLOSSARY 37

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SCHEME INFORMATION

SPONSORING TRUSTEE Axis Pension Trust Ltd.#4 Ibadan AvenueEast LegonAccra.

BOARD OF TRUSTEES § § § §§§

FUND MANAGERS Databank Asset Management Services Ltd.#61 Barnes RoadAdabraka, Accra.

STANLIB Ghana Ltd.Stanbic Height, Plot 215South Liberation LinkAirport City, Accra.

Omega Capital Ltd.The Alberts, # 23 Kanda Estates Kanda, Accra.

FUND CUSTODIANS Zenith Bank (Ghana) Limited Premier Towers, Liberia Road PMB CT 393, Cantonments Accra.

AUDITORS John Kay & Co7th Floor, TrustTowersFarrar Avenue, AdabrakaAccra.

Afriyie OwareRobert Marshall BenninSimon Komla Agbenyegah AyiviDaniel Kwasi Sarpong Paa Kwesi MorrisonIvy Naa Odey Hesse

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CHAIRMAN’S REMARKSOn behalf of the Board of Trustees, it is my privilege to bring to you the fifth Annual Report of Cedar Provident Fund. The 2017 Annual Report reviews the economy and highlights the scheme’s administrative, investment and financial operations during the year under review.

January 2017 saw another successful power transition from one political party to another in Ghana’s multi-party democratic era. This marks the third successful interparty transfer of power under the fourth republican constitution. This positive political headwind, years of fiscal consolida-tion and prudent economic management, led to an improved economic performance in 2017. GDP grew by 8.5% in 2017, with Debt to GDP reducing to 69.8% - in 2017 - from 73.3% at end of December 2016. With the economy expanding in 2017, there were notable improvements in key macro-economic indices. From a high of 15.4% at the beginning of 2017, inflation continued to trend downward to 11.8% at the end of December 2017. A single digit inflation for year end 2018 is projected by government. In line with government’s short-to-medium term objective of correcting interest rates along the yield curve and thereby aligning the duration of government projects with funding, we saw the 91Day, 182Day Treasury Bills and the 1Yr Treasury Note drop from 16.45%, 17.64% and 21%,re-spectively at the beginning of 2017 to 13.35%, 13.88% and 15.00%, respectively, by the end of the year.

Government issued a number of long dated bonds; the most significant being the Energy Sector Levy Act (ESLA) bond to settle outstanding public indebtedness to some financial institutions. The total amount raised through the initial 7Year and 10Year bond issuance fetched GH¢4.7bil-lion of the GH¢10billion needed. The outstanding amount is expected to be raised in 2018 through the same vehicle. Clearing these legacy debts should improve the balance sheets of the banking sector.

The year under review was full of important landmark monetary policy decisions and activities. The Bank of Ghana took the extraordinary action of revoking the operat-ing licenses of two indigenous banks; UT Bank and Capital Bank, for capital impair-ment reasons. UT Bank was subsequently delisted from the Ghana Stock Exchange. Another important monetary policy activity was the announcement by the central bank to increase the minimum capital require-ment for commercial banks from GH¢120-million to GH¢400million by end of 2018. This move sparked speculations of possible mergers and acquisitions within the banking sector in 2018. Many analysts have applauded the policy shift and suggested that it will usher the nation into an era of strong and financially sound banking sector able to undertake high-ticket transactions for economic expansion. The central bank also reduced the Monetary Policy Rate (MPR) by some 550 basis points (from 25.5% in January to 20% in November) within 2017 alone.

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Afriyie OwareChairman, Board of Trustees.

Cedar Provident Fund benefited from the Trust’s strategic decision to concentrate investments on the long end of the yield curve when the Trust saw that the high short-term rates at the beginning of 2017 were not sustainable. Largely driven by its fixed income holdings, the Growth, Moder-ate and Capital Preservation investment bundles posted 20.20%, 20.12% and 19.94% full year returns, respectively. The scheme therefore out-performed inflation by an average of 8.3% across the three retirement plans, during 2017. The Trust is committed to its key investment objective of delivering positive real returns for our members from year to year.

Following revisions in guidelines for invest-ing pension funds’ assets by the National Pensions Regulatory Authority (NPRA) earlier in 2017, the Board of Trustees of your scheme also revised the scheme’s Investment Policy to accommodate the new and exciting asset classes introduced by the regulatory review. Alternative invest-ment asset classes have been introduced to complement the more traditional asset classes. The object of the regulatory revision is to make pension funds impact more positively on the Ghanaian economy by allowing for investments in infrastruc-ture and other critical areas of economic development. The scheme intends to take full advantage of the wider investment horizon for improved returns to members.

On behalf of the Board of Trustees, I thank all participating employers and scheme members for their support in the successful management and administration of Cedar Provident Fund in 2017.

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FUND ADMINISTRATION REPORT

Governance Cedar Provident Fund is registered under the National Pensions Act, 2008 (Act 766) as amended in the National Pensions (Amendment) Act,2014 (Act 883) and Occupational and Personal Pensions Scheme (General) Regulations 2011, L.I 1990 as a third tier provident fund to supplement retirement savings of members. The scheme is tax-qualified(up to 16.5% of members’ basic salaries

contributed are tax-deductible) and runs under a Trust Deed and Scheme Rules. Axis Pension Trust Limited is the scheme sponsor. Cedar is run by a six-member Board of Trustees (the “Trust”). It is the responsibility of the Trust - membership of which is listed below - to formulate invest-ment policies for, and supervise, the day-to-day management of the scheme:

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Trustee Designation#

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1 Afriyie Oware Chairman2 Robert Marshall Bennin Member 3 Simon Komla Agbenyegah Ayivi Member4 Daniel Kwasi Sarpong Member-Nominated5 Paa Kwesi Morrison Member-Nominated6 Ivy Naa Odey Hesse Independent Trustee

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7Membership of the Scheme

2017 2016 2015

Members as at 1st January

4,427 3,369 2,523

Joiners 1,703 1,494 883

Leavers 563 436 37

Members as at 31st December

5,567 4,427 3,369

Member Contributions, Vesting of Benefits, Payments & Transfers

26,877,338 14,162,457

5,829,919 2,901,523

67,140,670 36,453,840

9,603,099 5,648,452

Cedar Provident Fund is purely a voluntary third tier scheme for employees of partici-pating establishments. An institution becomes a participant by completing enrolment forms and submitting same to Axis Pension Trust Ltd. The table below shows the scheme’s membership over the past three years:

Retiring members may also transfer their provident fund benefits into personal pension schemes and/or annuity plans. Scheme members should contact their employers’ HR department or Axis Pension Trust for assistance on transfers and benefit payments.

Financial HighlightsHighlighted in the table below are some important scheme statistics over the past years:

Member CommunicationScheme information is disseminated through scheme brochures, fund fact sheets and periodic emails. Members who wish to know more about Cedar Provident Fund are advised to contact the office of their employers’ HR department for copies of scheme brochures; information guide designed to educate mem-bers about retirement planning and the rules guiding this scheme. Axis Pension Trust circulates quarterly fund fact sheets and puts same on the company’s website at the end of each quarter. Key contact persons within the HR offices of participating employers could be contacted for copies of the fact sheets.

The exact amount contributed into this scheme is based on the collective bargaining agreement between employees and their respective employers. As stated earlier, up to 16.5% of members’ basic salaries contributed into Cedar Provident Fund are tax-free. Members’ contributions and accrued benefits vest in members in accordance with the vesting conditions set by their employers. Withdrawals made before the tenth anniversary of first contri-bution, and before retirement, attract applicable taxes to Ghana Revenue Authority (GRA). Scheme members exiting for reasons other than retirement are encouraged to consider transferring their benefits to other qualified provident fund schemes in order to enjoy full tax benefits. Members of Cedar who joined from previ-ous employers can transfer their accumu-lated contributions and accrued benefits from their previous employers’ provident fund into this scheme.

Net InvestmentIncome

Assets under Mgt.

Activity/Asset Type

2017(GH¢)

2016(GH¢)

2015(GH¢)

Contributions

Benefits Paid

27,830,568

19,778,455

13,765,927

90,963,837

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Access to Benefit StatementsScheme members have a 24-hour online access to their benefit statements via the link https://cap.axispension.com/crm/member. Members may use their SSNIT numbers or their Cedar Provident Fund account numbers to log onto the platform and view or print their account transactions. All participants are encouraged to take advantage of this platform to update themselves with the growth and performance of their retirement savings.

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INVESTMENT REPORT

Economic & Market OverviewGlobal economic activities strengthened in 2017, with growth expected at 3.6% buoyed by growth in the USA, the Euro area, Japan, emerging Asia and Russia. Growth in sub-Saharan Africa is also slowly improving although expected growth rate of 2.6% remains relatively subdued. The relative modest recovery in sub-Saharan Africa growth has mainly been driven by improvements in the three large econo-mies of Nigeria, South Africa and Angola.

Economic growth on the domestic front rebounded significantly, with GDP ending 2017 at 8.5%. Data from Ghana Statistical Services show that the economy grew by 9.3% in the third quarter, up from 9.0% and 6.6% in the second and first quarters of 2017, respectively. Non-oil GDP growth was 5.9% in the third quarter, up from the 3.9% recorded in Q1-2017.

External sector developments for 2017 were very strong. Trade account recorded a surplus of US$1.1 billion (2.3% of GDP) compared with a trade deficit of US$1.8 billion (4.2% of GDP) in December 2016. This was driven mainly by higher export receipts from commodities like oil, cocoa and gold. Consequently, Gross Internation-al Reserves (GIR) stood at US$7.6 billion (4.3 months of import cover) compared to US$6.2 billion (3.5 months of import cover) in December 2016. The effect is a relatively stable domestic currency performance. Overall, the cedi depreciated against the US dollar by 4.9% year-on-year, compared with 9.7% in 2016. This marks the strongest performance since 2011. The local currency however depreciated by 21% and 15.7% against the Euro and the British pound respectively.

There were also deliberate attempts by Government at extending the yield curve maturities with the issuance of the first ever 15Yr domestic bond with a face value of GH¢3.42 billion in March 2017 and another GH¢3.58 billion in 10Yr bond. Govern-ment’s bond re-profiling strategy led to significant increase in new issuances of long term (5-10years) papers via tap trans-actions in 2017. Thus, the proportion of short dated instruments declined from 37.6% in December 2016 to 23.1% in November 2017. Activities in the fixed income market were further buoyed by the issuance of long term bond by ESLA PLC to pay down energy sector debt arrears. The ESLA PLC realized GH¢2.42 billion from the sale of 7Yr bond at a yield of 19.00% and a further GH¢2.29 billion 10Yr bond at a cut- off yield of 19.5%.

The equities market rallied throughout 2017. The GSE-CI returned 52.7% in local currency price terms with the second half of the year contributing 36.39% to total return. The market’s bullish performance follows a bearish return of minus 12% and minus 15% in 2015 and 2016, respectively.

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Securities Benchmark Permitted Ranges (%)

Corporate Bond/Debt

Equity

5%

25%

25%

30%

5%

< 5%

10% - 30%

< 65%

0% - 35%

0% - 5%

< 10%10%

Government Bonds

Treasury Bills and Notes

Other Money Market

Mutual Funds

Investment Policy Cedar Provident Fund is an umbrella provident fund scheme made up of three retire-ment plans underlined by segregated asset class-based constituent fund portfolios, namely; Equity, Bond Fund and Money Market Constituent Funds. This strategy is designed to improve investment returns within an asset class and to optimize efficiency in management of assets. Cedar is managed to provide stable investment returns, that are commensurate with investment risk on constituent asset classes of the portfolio and to achieve positive real returns over a 5-year period, that exceeds the returns on the benchmark relative portfolio. Assets of the scheme are invested with cognisance to liquidity constraints and the objective of providing timely cash flow to meet anticipated payment obligations. Below is the strategic global asset allocation and benchmark of the scheme:

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Portfolio Execution The scheme’s fixed income managers took more investment positions in longer-dated fixed income securities in order to lock-in at the then high interest rates at that segment of the market, when interest rates were expected to fall. Managers took advantage of key primary issues like the ESLA Plc bond and other long dated government securities, as well as some secondary market trade opportunities. This scheme has therefore been strategically positioned to enjoy relative high returns, even after sustained drops in interest rates. Overall, Cedar’s assets remain heavily invested in fixed income securities. Total return is consequently influenced by performance of fixed income. That notwith-standing, Cedar Provident Fund invested in some listed equities with good fundamen-tals and generally benefited from the great outturn of the general equities market. The table below shows the quarterly positioning of the scheme in 2017:

Investment Policy & Portfolio Allocation

11Q1-2017 Q2-2017 Q3-2017 Q4-2017

Corporate Bond/Debt

Asset C

lass

Equity

6,797,024

37,161,613 40,769,766 49,153,731

1,407,308

10,994,295

5,573,0732,299,740

19,690,016

-3,323,173

17,015,975

2,207,564

7,887,454 10,578,253

42,912,421

4,881,310

16,969,653

2,715,683

5,451,256 5,959,190

6,523,210

6,399,507 7,070,558

Government Bonds

Treasury Bills and Notes

Money Market

Mutual Funds

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2%

Investment Management Arrangement Portfolio value includes cash and tactical allocation at the balance sheet date. The arrangements for segregated management of the scheme’s assets, as at December 31, 2017, are set out below:

Fund ManagerConstituent Fund Market Value (GH¢) % of the Fund

Money Market Constituent Fund

Omega Capital Ltd.

Stanlib Ghana Ltd

16,687,933.96 19.38%

33,857,968.22 39.31%

Equity Constituent Fund

Databank 35,374,756.82 41.31% Bond Constituent Fund

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Investment Result

The result for Fiscal Year 2017 is20.20%, +20.12%, and +19.94%

For the Growth, Moderate and Capital Preservation portfolios, respectively, due to positive returns across all the various asset classes.

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2013 2014 2015 2016 2017

Money Market Constituent Fund 25.09%

- 27.82%

22.86%

18.85%

25.60%

19.08%

24.10%

18.58% 21.38% 23.20% 23.51%

20.68%

19.45%

20.68%

Equity Constituent Fun

Bond Constituent Fund

Net Historical Returns (per annum)

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Outlook & Portfolio StrategyGlobal growth forecast for 2018 is expected at 3.9%, reflecting growth momentum driven by recently approved US tax policy changes and general expected growth in the Euro and Asian regions. Sub-Saharan Africa growth is pegged at 3.3%, while projected growth for Ghana - according the governments’ budget statement - is estimated at 6.8%. The domestic equity market is expected to continue its bullish trajectory on the back of strong predicted economic growth in 2018 and falling interest rates on the fixed income market. The scheme will take well researched positions in equity in 2018, whilst exploring opportunities in alternative assets such as Private Equity (PE) and Real Estate Investment Fund (REIF) in line with NPRA’s revised investment guidelines.

With the general expectation that inflation will hit single digit in 2018, we are likely to see further contraction in yields across the government curve. This scheme will seek out opportunities for secondary market yield pick-ups in government sectors and take advantage of high yielding corporate bonds to enhance portfolio returns. Managers of the scheme will keep monitoring activities in the banking sector to decipher the impact of the regulatory directive for banks to increase minimum stated capital from GH¢120 million to GH¢400 million.

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Trustees of Cedar Provident Fund submit these audited financial statements for the year ended December 31, 2017 in accordance with the National Pensions Act, 2008 (Act 766) as amended in National Pensions (Amendment) Act, 2014 (Act 883) and the Occupational and Personal Pensions Scheme (General) Regulations 2011, L.I 1990.

Statement of Trustees’ ResponsibilitiesTrustees are responsible for managing the day-to-day operations of the Fund; includ-ing the keeping of records in respect of contributions, payment of benefits and maintenance of internal controls.

The Occupational & Personal Pension Scheme Regulations require Trustees to:•Prepare a statement of accounting policies specifying the accounting policies to be followed in preparing financial statements.•Cause to be prepared profit & loss accounts and balance sheet as at the last day of the period that give true and fair view of the financial position of the Fund.•Ensure that the financial statements are prepared in accordance with applicable accounting guidelines.•Ensure that an investment report is prepared for each period of the Fund. •Ensure that a report is prepared for the Fund in accordance with the relevant regulations for each financial period of the Fund.•Make available to fund members, in each financial year of the Fund, reports so prepared.

Trustees have a general responsibility for ensuring that adequate accounting records are kept in a manner that explain transactions of the Fund and the financial status of the Fund.

Financial StatementsIn preparing the financial statements of the Fund as presented in this report, Trustees have selected suitable accounting policies and applied them consistently in accordance with the relevant accounting standards and complied with the require-ments of all pension legislations in Ghana..

AuditorIn accordance with regulatory require-ments, the Board of Trustees appointed John Kay & Co. as Scheme Auditor.

TRUSTEES’ REPORT

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Afriyie OwareChairman,Board of Trustees

Independent TrusteeIvy Hesse

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OpinionWe have audited the financial statements of Cedar Provident Fund, which comprise Statement of Net Assets available for bene-fits as at 31st December, 2017, and the Statement of Changes in Net Assets available for benefits and Statements of Cash Flows for the year ended and a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements give a true and fair view of the financial transactions of the Scheme at 31 December 2017 and of the disposition at that date of its assets and liabilities, other than the liabilities to pay benefits after the year end, in accordance with International Financial Reporting Standards and the requirements of the National Pensions Act, 2008 (Act 766) and the Occupational and Personal Pension (General) Regulations, 2011 (L.I. 1990).

Basis for OpinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Scheme in accordance with the ethical requirements that are relevant to our audit of the financial statements in Ghana, and we have fulfilled our other responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of the Trustees for the Financial StatementsThe Trustees are responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the requirements of the National Pensions Act, 2008 (Act 766) and the Occupational and Personal Pension (Gener-al) Regulations, 2011 (L.I. 1990), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Trustees are also responsible for overseeing the Scheme’s financial reporting process.

In preparing the financial statements, the Trustees are responsible for assessing the Scheme’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Scheme or to cease operations, or has no realistic alternative but to do so.

AUDITOR’S REPORT

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CEDAR PROVI-DENT FUND

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Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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STATEMENTS OF ACCOUNTSSTATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS

AS AT 31ST DECEMBER, 2017

Note2017 2016GH¢ GH¢

ASSETSBank Balance 4 1,722,78 617,519

Held to Maturity 5 71,941,115 58,555,876

Fair Value through Profit and Loss 6 12,456,755 6,746,997

Receivables 7 4,843,178 1,220,278

TOTAL ASSETS 90,963,837 67,140,670

LIABILITIESBenefits Payable 8 2,112,048 124,434

Administrative Expenses Payable 9 170,930 169,427 24,201 Other Payables 15

40,211

TOTAL LIABILITIES 2,323,189 318,062

TOTAL ASSETS LESS LIABILITIES 88,640,648 66,822,608

Represented By:

The Financial Statements on pages 10 to 25 were approved by the Trustees on ……………. and were signed on their behalf by:ON BEHALF OF THE BOARD OF TRUSTEES

NET ASSETS AVAILABLE FOR BENEFITS 88,640,648 66,822,608

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Note 2017 2016

GH¢ GH¢

DEALINGS WITH MEMBERSContributions 10 27,830,568 26,877,338

Benefits 11 (19,778,455) (5,829,919)

Net Additions from Dealings with Members 8,052,113 21,047,419

RETURNS ON INVESTMENTS

Investment Income 12 13,744,257 10,089,325

Brokerage Fees/Commissions

Net Investment Income

Net Gains/(Losses) on Fair Value Through P/Lt

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13

14

(21,352) (6,293)

13,722,905 10,083,032

1,535,952 472,718

Administrative Expenses 1,492,930 952,651

Increase In Net Assets For The Year 21,818,040 30,650,518

Increase In Net Assets For The Year

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED 31ST DECEMBER, 2017

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Note 2017 2016

GH¢ GH¢

Net Assets Available For Benefits As At 1st January

Net Assets Available For Benefits As At 31st December

66,822,608 36,172,090

21,818,040 30,650,518

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88,640,648 66,822,608

Increase In Net Assets For The Year

STATEMENT OF MOVEMENT IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED 31ST DECEMBER, 2017

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Note 2017 2016

GH¢ GH¢

Increase (Decrease) in Net Assets for the Year 21,818,040 30,650,518

(3,384,628)Adjusted for: Investment Income (Non-Cash)

Increase/(Decrease) in Benefits Payable

Increase/(Decrease) in Admin Exp. Payable

Increase/(Decrease) in Other Payables

Increase/(Decrease) in Receivables)

(5,256,724)

CASH FLOWS FROM OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES

1,987,614 (61,482)

Net Cash Generated from Operating Activities

1,503 73,593

32,936 24,201

(3,622,900) (1,212,949)

Purchase of Treasury Bonds

Purchase of Treasury Bills

Purchase of Ordinary Shares

Purchase of Money Market Securities

Purchase of Corporate Bonds

Purchase of LGSA Securities

Purchase of Units of Open/Closed Funds

(37,376,602) (19,694,821)

(26,939,575) (14,466,834)

(1,046,957) (936,694)

(30,927,760) (27,000,531)

(3,795,000) (2,861,400)

(2,984,567) -

Proceeds from Disposal of Treasury Bonds

Proceeds from Disposal of Treasury Bills

Proceeds from Disposal of Money Mkt Sec

Proceeds from Disposal of Corporate Bonds

Proceeds from Disposal of Units of Open/Closed Funds

19,930,462 2,532,069

32,846,880 14,153,622

36,262,798 22,787,237

3,115,122 6,018

- 100,000

(3,040,000) (200,000)

Cash and Cash Equivalents as at 1st January 617,519 209,600

14,960,469 26,089,253

Net Cash Used in Investing Activities (13,855,199) (25,681,334)

Cash and Cash Equivalents as at 31st December 1,722,789 617,519

Net Increase (Decrease) in Cashand Cash Equivalents

1,105,270 407,919

STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31ST DECEMBER, 2017

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231. SCHEME INFORMATION

The Scheme is a defined Contribution Scheme which provides Lump Sum bene-fits on Retirement and such other ancillary benefits to members who meet the qualifying conditions stipulated under the National Pensions Act, 2008 (Act 766). Axis Pension Trust Ltd. is the sponsor of the Cedar Provident Fund. The Scheme is a Master Trust Scheme with 94 employers contributing into the Fund for 5,567 mem-bers as at the date of reporting. t

2. BASIS OF PREPARATION2.1 Statement of Compliance The Financial Statements of the Scheme have been prepared in accordance with International Financial Reporting Standards (IFRS) and in compliance with the National Pensions Act, 2008 (Act 766), the Occupational and Personal (General) Regulations, 2011 (L.I. 1990) and relevant Guidelines.

2.2 Basis of Measurement The Financial Statements are prepared under the historical cost convention, as modified by the revaluation of certain financial instruments. The actuarial present value of pensions and other future benefits of the Scheme are not applicable to these Financial Statements.

2.3 Use of Estimates and Judgment The preparation of financial statements in conformity with IFRS requires manage-ment to make judgment, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses.

The estimates and the associated assump-tions are based on historical experience and other factors that are believed to be reason-able under the circumstances, the results of which form the basis of making the judgment about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

2.4 Estimates and assumptionsThe key assumptions concerning the future and other key sources of estimation uncer-tainty at the balance sheet date, that have a significant risk of causing a material adjust-ment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(i) Quoted Investments The financial assets at fair value through profit or loss are determined by reference to their quoted bid price at the reporting date. Changes in market values are recognised in the statement of comprehen-sive income.

(ii) Cash and Cash EquivalentsThe fair value of cash and cash equivalents approximates their carrying values.

(iii) Non-Derivative Financial LiabilitiesFair value, which is determined for disclo-sure purposes, is calculated on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. Instruments with maturity period of 6 months are not discounted as their carrying values approxi-mate their fair values.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2017

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2.5 Fair value of Financial Instruments The framework for measuring fair value provides a fair value hierarchy that prioritiz-es the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy under IFRS 13 are described as follows:

Level 1 Inputs to the valuation method-ology are unadjusted quoted prices for identical assets or liabilities in active markets that the Scheme has the ability to access.Level 2 Inputs to the valuation methodol-ogy include: •quoted prices for similar assets or liabili-ties in active markets; •quoted prices for identical or similar assets or liabilities in inactive markets; •Inputs other than quoted prices that are observable for the asset or liability; •Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.Level 3 Inputs to the valuation method-ology are unobservable and significant to the fair value measurement.

2.6 ComparativesWhere necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

3. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of the financial state-ments are set out below. 3.1 Functional and Presentation Currency The financial statements are presented in Ghana Cedis (GHS), which is the Scheme’s functional and presentation currency. Foreign currency transactions are translat-ed into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange ruling at the end of the reporting period. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the Statement of changes in net assets.

3.2 Contributions Contributions are recognized in the period in which they fall due. The Contributions are in compliance with rates as per the National Pensions Act, 2008 (Act 766) and the Scheme Governing Rules

3.3 Benefits Benefits are recognized in the period in which they fall due. Benefits represent all valid benefit claims paid/payable during the year in compliance with the National Pensions Act, 2008 (Act 766) and the Scheme Governing Rules.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2017

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253.4 Investment Income Dividend Income from investments is recognized when the shareholders’ right to receive payment has been established. Interest income is accrued on a time basis by reference to the principal outstanding and the effective interest rate applicable.

3.5 Financial Assets The Trustees determine the classification of Financial Assets of the Scheme at initial recognition.

Financial Assets are classified as follows: a. Financial Assets at Fair Value through Profit or Loss A Financial Asset at fair value through profit or loss is a financial asset that meets either of the following conditions:

i. Held for Trading A financial asset is classified as held for trading if it is acquired principally for the purpose of selling or repurchasing in the near future; or part of a portfolio of identi-fied financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking.

ii. Designated at Fair Value through Profit or Loss Upon initial recognition as financial asset or financial liability, it is designated by the Trustees at fair value through profit or loss except for investments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured.

b. Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

c. Available-for-Sale Financial Assets Available-for-Sale financial assets are non-derivative financial assets that are designated on initial recognition as available for sale and are held for an indefi-nite period of time and may be sold in response to needs for liquidity or changes in interest rates,

d. Held-to-Maturity Investments Held-to-maturity investments are non-de-rivative financial assets with fixed or deter-minable payments and fixed maturity that the Trustees have the positive intention and ability to hold to maturity.

e. Initial Recognition of Financial Asset Purchase and sales of financial assets held at fair value through profit or loss, available for sale financial assets and liabilities are recognized on the date the Trustees commit to purchase or sell the asset. Finan-cial assets are initially recognized at fair value plus directly attributable transaction costs, except for financial assets at fair value through profit or loss.

f. Subsequent Measurement of Financial Asset Available for Sale financial assets are subse-quently measured at fair value with the resulting changes recognized in Statement of Movement in Net Assets Available for Benefits. The fair value changes on available for sale financial assets are recycled to the Statement of Changes in Net Assets when the underlying asset is sold, matured or derecognized.

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Financial Assets classified as fair value through profit or loss are subsequently measured at fair value with the resulting changes recognized in the Statement of Changes in Net Assets.

g. De-recognition Financial assets are derecognized when the right to receive cash flows from the financial assets has expired or where the Scheme has transferred substantially all risks and rewards of ownership. Any interest in the transferred financial assets that is created or retained by the Scheme is recognized as a separate asset or liabili-ty. Financial liabilities are derecognized when the contractual obligations are discharged, cancelled or expired.

h. Amortized Cost Measurement The amortized cost of a financial asset or financial liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayment, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount recognized and the maturity amount, minus any reduction for impairment.

i. Identification and Measurement of Impairment The Trustees assess at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets are impaired. A financial asset or a group of financial assets are impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recog-nition of the asset, and that loss event has an impact on the estimated future cash flows of the financial asset, or group of financial assets that can be reliably estimated.

Objective evidence that financial assets are impaired can include default or delinquency by a debt issuer and other observable data that suggests adverse changes in the payment status of the debt issuer. Impairment losses on available for sale financial assets are recognized by transfer-ring the difference between the acquisition cost and the current fair value out of Net Assets in the Statement of Changes in Net Assets available for benefits.

The Trustees first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the Trustees determine that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized, are not included in a collective assessment of impairment.

Future cash flows in a group of financial assets that are collectively valuated for impairment are estimated on the basis of the historical loss experience for assets with credit risk characteristics similar to those in the Scheme. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current condi-tions that did not affect the period on which the historical loss experience is based, and to remove the effects of conditions in the historical period that do not exist currently. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized,

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the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized in the Statement of Changes in Net Assets.

Impairment losses on Available-for-Sale financial assets are recognized by transferring the difference between the amortized acquisition cost and current fair value out of Net Assets to the Statement of Changes in Net Assets. When a subsequent event causes the impairment loss on an Available-for-Sale financial asset to decrease, the impair-ment loss is reversed through the Statement of changes in net assets. However, any subsequent recovery in the fair value of an impaired Available-for-Sale financial asset is recognized directly in Net Assets.

3.6 Provisions Provisions are recognized when the Scheme has a present legal or constructive obliga-tion as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Where the obligation is expected to be settled over a period of years, the provision is discount-ed using a discount rate appropriate to the nature of the provision.

3.7 Cash and Cash Equivalents Cash and cash equivalents as referred to in the Cash Flow Statement comprises, current and call accounts with banks

3.8 Standards, Amendments and Interpretations issued but not yet effective New standards, amendments to standards and interpretations which are not yet effec-tive for the year ended 31 December 2017, and have not been applied in preparing these financial statements include;

Title Accounting Standard

Nature of Impending Changes Effective Date

IFRS 9 Financial Instruments

1 January 2018This is a new standard issued to replace the existing standard IAS 39 financial instruments. Key modifications include measurement and clarification of financial instruments. The standard is expected to be impacted by ongoing work of IASB.

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2017 2016

GH¢ GH¢

Corporate Bonds

Treasury Bills

Local Gov't and Statutory Agency Securities

Fixed Deposits

5. HELD TO MATURITY INVESTMENTS

7,500,210 6,491,650

Treasury Notes 49,153,731 29,103,927

Total Held to Maturity Investments

1,407,308 7,385,8903,078,040 -

10,801,826 15,574,409-

71,941,115 58,555,876

2017 2016

GH¢ GH¢

Call Account 1,722,789 617,519

Total Bank Balance 1,722,789 617,519

4. BANK BALANCE

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GH¢ GH¢

Benso Oil Palm Plantation Ltd

Ecobank Ghana Ltd

Enterprise Group Ltd

Ghana Commercial Bank

78,948 26,832

121,814 65,363

521,330

302,672

138,000

165,540

235,804Standard Chartered Bank 537,320

Total Petroleum Ghana Ltd

Tullow Oil Ltd.

CAL Bank Ltd.

Mega African Capital

79,072

86

162,340

32,076

134

93,986

753,480 756,000

SocieteGenerale 154,734 116,994

51,920

-

Ghana Oil Company Ltd

Fanmilk Ghana Ltd.

166,710

44,250

Edendale Preference Shares

HFC REIT

Databank Balanced Fund

Databank Money Market Fund

4,147,803 2,884,564

700,796 753,961

-

937,603

119,849

784,541

Stanlib Income Fund 180,458

Stanlib Cash Trust Fund

Omega Equity Fund

Omega Income Fund

Heritage Fund

161,117

591,147

1,225,098

122,408

121,779

63,087

214,159

92,958

EDC Fixed Income Fund

Total Available for Sale Investments

1,497,019 -

-

12,456,755 6,746,997

6. FAIR VALUE THROUGH PROFIT AND LOSS

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2017 2016

GH¢ GH¢

8. BENEFITS PAYABLE

2017 2016

GH¢ GH¢

NPRA Fees

Trustee (Administrator) Fees Payable

Pension Fund Manager Fees Payable

Pension Fund Custodian Fees Payable Audit Fees Payable

9. ADMINISTRATIVE EXPENSES PAYABLE

24,583 49,593

Asset Based Fees

Total Administrative Expenses Payable

67,045 49,739

38,429 28,318

2,234 4,206

38,639 37,571

170,930 169,427

2017 2016

GH¢ GH¢

Contributions Received

10. CONTRIBUTIONS

23,956,867 17,177,731

Contributions Receivable 2,424,762 1,157,727 Transfer in 1,448,939 8,541,880

Total Administrative Expenses Payable 27,830,568 26,877,338

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2017 2016

GH¢ GH¢

Contributions Outstanding:For Less than 30 daysOther Receivables

2,424,762 1,157,727

2,418,416 62,551

Total Receivables 4,843,178 1,220,278

Lump Sum Benefit Payable

Taxes Payable on Withdrawals

1,867,114 111,052

244,934 13,382

Total Benefits Payable 2,112,048 124,434

7. RECEIVABLES

30

31

2017 2016

GH¢ GH¢

Interest on Treasury Bills

Interest on Money Market Securities

Interest on Corporate Bonds

Interest on Local Gov't & Stat. Agency Sec. Dividend Income

12. INVESTMENT INCOME

7,532,679 4,037,441Interest on Treasury Bonds

Total Investment Income

485,475 1,518,093

3,367,782 3,150,829

93,473 -

Interest on Bank Deposits Other Income

151,174 75,736

36,561 17,607

- 887

2,077,113 1,289,619

13,744,257 10,089,325

2017 2016

GH¢ GH¢

11. BENEFITS

2017 2016

GH¢ GH¢

Gain from valuation of holdings in Open / Closed End Funds

Gain / (Loss) in valuation of Treasury Bonds

Gain/(Loss) from valuation of holdings in REITs

Gain/(Loss) in disposal of Treasury Bonds

13. GAINS / LOSSES ON INVESTMENT INCOME

685,188 (150,168)Gain / (Loss) in valuation of Ordinary Shares holdings

Net Gains / (Losses) on Fair Value Through P/L

324,996 197,568

205,221 327,819

97,499

230,834 -

89,713

1,535,952 472,718

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Lump Sum Benefit Paid 15,889,932 5,146,474

Lump Sum Benefit Payable 1,867,114 111,052

Taxes Paid on Withdrawals 2,021,409 572,393

Total Benefits 19,778,455 5,829,919

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2017 2016

GH¢ GH¢

NPRA Fees

Trustee (Administrator) Fees

Pension Fund Manager Fees

Pension Fund Custodian Fees

Audit Fees

14. ADMINISTRATIVE EXPENSES

Asset Based Fees

Total Administrative Expenses

252,605 157,092

691,922 428,432

136,237 119,009

Bank Charges Trustee Registration Expense

520

2,500

4,468 4,206

572

20,000

387,178 243,340

1,492,930 952,651

2017 2016

GH¢ GH¢

Benefits returned into fund

Wrong credit into account

40,211 7,275 - 16,926

Total Receivables 40,211 24,201

15. OTHER PAYABLES

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332017

GH¢ GH¢ GH¢Contribution

47,917,070 18,905,538 66,822,608

41,596,49513,765,92727,830,568

(19,778,455) (19,778,455)

88,640,648 32,671,465 55,969,183

Balance as at 1st January

Additions

Deductions

Balance as at 31st December

TotalNet Investment Income

2016

GH¢ GH¢ GH¢Contribution

26,869,651 9,302,439 36,172,090

(5,829,919)

(5,829,919)

36,480,437 9,603,099 26,877,338

47,917,070 18,905,538 66,822,608

Balance as at 1st January

Additions

Deductions

Balance as at 31st December

TotalNet Investment Income

15. NET ASSETS AVAILABLE FOR BENEFITS

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17. BROKERAGE FEES/COMMISSIONS

This refers to service charges assessed by brokers in return for handling the purchase or sale of securities on behalf of the Scheme.

18. FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES The Scheme has exposure to the following risks from its use of financial instruments: Asset/Portfolio/Credit risk Liquidity risk Market risk Operational riskThis note presents information on the Scheme’s exposure to each of the risks, the Scheme’s objectives, policies and process-es for measuring and managing risk.

Risk Management framework The Trustees have overall responsibility for the establishment and oversight of the Scheme’s Risk Management framework. The Scheme’s Risk Management policies are established to identify and analyze the risks faced by the Scheme, to set appropri-ate risk limits and controls, and to monitor risks and adherence to limits. The Trustees, through the standards and procedures aims to develop a disciplined and constructive control environment, in which all Trustees understand their roles and obligations. The Trustees are responsible for monitoring compliance with risk management policies and procedures, and for reviewing the adequacy of the risk management frame-work in relation to risks faced by the Scheme.

(a) Asset/Portfolio/Credit Risk Credit risk is the risk that counterparties (i.e. financial institutions and companies) in which the Fund's assets are invested will fail to discharge their obligations or commitments to the Fund, resulting in a financial loss to the Fund.The Fund's policy over credit risk is to minimise its exposure to counterparties with perceived higher risk of default by dealing only with counterparties that meets the standards set out in the NPRA guide-lines and the Fund's investment policy statement

(b) Liquidity risk Liquidity risk is the risk that the fund either does not have sufficient financial resources available to meet all its obligations and commitments as they fall due. The fund’s approach to managing liquidity is to ensure that it will maintain adequate liquidity in the form of cash and very liquid instruments to meet its liabilities (including benefits) when due.

3 months or less (GH¢)

4,275,5312,971,737 3,554,558 -

5,955,4444,622,806--

4,513,169 3,491,825 5,698,136 36,857,909

42,813,353

13,875,5007,767,3567,484,906

Fixed Deposits

Financial Assets

Corporate Bond

Government Securities

4 - 6 Months (GH¢)

7 - 12 Months(GH¢)

More than 12 Months(GH¢)

3 months or less (GH¢)

2,112,048

170,930

40,211 -

- --

- --

- -

2,323,189

Benefit Payable

Other Payables

Financial Assets

Administrative Expenses Payable

4 - 6 Months (GH¢)

7 - 12 Months(GH¢)

More than 12 Months(GH¢)

The following are contractual maturities of financial assets:31 December 2017:

31 December 2017:

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(c) Market risk Market risk is the risk that changes in market prices, such as interest rates on investments will affect the fund’s income. The objective of market risk management is to manage and control market risk expo-sures within acceptable parameters, while optimising the return.

(d) Equity Price risk Listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Fund's policy over equity price risk is to minimize its exposure to equities and only deal with equities that meets the standards set out in the NPRA guidelines and the Fund's investment

(e) Interest Rate risk Interest risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The investment managers advise the Trustees on the appropriate balance of the portfolio between equity, fixed rate interest, and variable rate interest investments. The Fund has no interest bearing liabilities.

(f) Operational risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Fund’s processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of Fund behaviour. Operational risks arise from all of the Fund’s operations and are faced by all pension schemes.The Fund’s objective is to manage opera-tional risk so as to balance the avoidance of financial losses and damage to the Fund’s reputation with overall cost effec-tiveness and to avoid control procedures that restrict initiative and creativity.

The primary responsibility for the development and implementation of controls to address operational risk is assigned to the administrator. This responsibility is supported by the develop-ment of following policies and standards;

governing rules and trust deed; investment policy statement; requirements for the reporting of non-compliance with regulatory and other legal requirements; training and professional development; ethical and business standards; risk mitigation, including insurance where this is effective.Compliance with the Fund governing rules is supported by a programme of annual reviews undertaken by the external auditor. The results of these reviews are discussed with Trustees.

19. TAX Under Section 89 (1) of the National Pensions Act, 2008 (Act 766), the Scheme is exempt from income tax.

20. COMMITMENTS AND CONTINGEN-CIES As at the date of reporting, there were no outstanding Commitments or contingen-cies.

21. EVENTS AFTER THE REPORTING PERIOD Events subsequent to the balance sheet date are reflected in the financial statements only to the extent that they relate to the year under consideration and the effect is material. As at the end of the reporting period, there were no events after the reporting period that relate to the year under consideration.

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Asset Allocation The proportion of an investment portfolio allotted to particular asset class.

Asset Class A group of securities that exhibit similar characteristics and behave similarly in the marketplace.

Asset Under Management (AuM)

The total market value of an investment portfolio at a given point in time.

Benefits Proceeds of an investment in a pension fund payable to members.

Bonds A debt security under which the issuer owes the holder a specified amount under specified conditions.

A company licensed by the National Pensions Regularity Authority (NPRA) to manage pension schemes under a Trust.

Designated dependant of a member nominated to receive his/her benefits in the scheme, in the event of the death of the member.

Beneficiary

Corporate Trustee

A person licensed by NPRA to, together with other NPRA-licensed persons, manage pension schemes under a Trust.

Individual Trustee

A bank authorised by NPRA to keep pension fund assets on behalf of the Trust.

Custodian

An investment professional, or entity, that advises Trustees on available investment avenues where pension fund assets could be invested.

Fund Manager

A scheme in which a member's benefits are determined by his/her contributions and investment returns accrued to those contributions.

Defined Contribution Scheme

These are shares of a limited liability company.Equities

All investments which pay interest at a pre-agreed rate with a fixed maturity date.

Fixed Income

One’s retirement income (monthly pension) as a percentage of his/her pre-retirement income.

Income Replacement Ratio

GLOSSARY

An investment scheme sponsored and run by a Corporate Trustee for employees of multiple organizations.

Master-Trust Scheme

An arrangement by which an employer and, usually, an employee makes regular contributions into a fund that is invested to provide the employee with income at retirement.

Pension Fund or Scheme

Pension schemes that allow individuals to enrol voluntarily and invest towards their retirement on individual basis, usually without the support of an employer.

Personal Pension Scheme:

An investment scheme sponsored by a company for and on behalf of employees of the sponsoring organization only.

Employer-Sponsored Scheme

An investment style by which members’ contributions are invested in different investment packages according to their ages or years to retirement.

Life-Cycle38

NOTES

AXIS PENSION PLAN